Debt Protection Product, Program, And Design Proficiencies

• Complimentary Payment Protection Programs
• Complimentary Involuntary Unemployment Payment Protection
• For all forms of direct lending,
• Particularly, for real estate secured lending
• Indirect Vehicle Lending Payment Protection
• Retailer Lending Payment Protection
• Optional Debt Cancellation or Debt Suspension Protection for Borrowers
• Credit Cards
• General-purpose credit cards
• Retailer credit cards
• Subprime credit cards
• Loans
• Home equity loans and lines
• First mortgage loans
• Consumer installment loans
• Direct vehicle loans
• Indirect vehicle loans [in the near future]
• GAP Waivers
• For direct and indirect vehicle loans
• Debt Waivers
• For lenders that do not have an automatic exemption from state insurance laws

Lender DPP Programs We Support

• Credit card issuers
• State and national banks
• State and federal credit unions
• Federal thrifts
• Finance companies

Retailer DPP Programs We Support

• Charge card issuers
• Retailers entering into retail installment sales contracts
• Retailers offering complimentary protection to enhance retail sales

Concepts and Structures Proficiencies

We assist clients with product design, pricing, and ways to transfer risk from consumers to risk taking entities. These clients are the product development teams of lenders, retailers, insurers, administrators, and product innovators, and their professional advisers. By specializing in these products for over 35 years, our professional staff has a broad understanding of all of the actuarial, lending, regulatory, tax, and statutory/GAAP accounting pronouncements that may affect how the risk is transferred.

• Debt protection product addenda
• Retailer-obligor or other contractual promises to consumers
• Insurance structures at the consumer level, such as GAP insurance; and credit life, disability, and involuntary unemployment insurance
• Contractual liability insurance policies: commercial insurance that moves the risk from a lender or an obligor to an insurance company
• Reinsurance into a producer-affiliated reinsurance company
• Reinsurance into a non-controlled foreign corporation

Tasks We Undertake

We assist lenders, retailers, administrators, and insurers in designing and pricing DPP programs. We specialize in analyzing new product ideas or modifications:

For credit card programs. We evaluate new protected events for existing programs or we recast existing protections for a particular segment of borrowers, such as non-working persons. We begin by understanding the proposed contingency or borrower segmentation, and finding relevant demographic and loss data. We then develop expected loss costs, and prepare an actuarial memorandum that a product innovator can use when presenting the concept to lenders’ risk managers and product managers or to potential insurers/risk takers.

For existing credit card programs. We serve as the consulting actuary, assisting the product managers and risk managers with setting the dollar reserve that will be held in the lender’s financial statement and setting the benefit reserve percentage that the lender will use in performing reserve calculations and for corporate budgeting and forecasting purposes. We review the loss experience of about 10 million DPP-protected cardholders each year.

For real estate secured lending. We assist the risk takers with a dollar estimate of the reserve that should be held in the financial statements and with an estimate of the benefit reserve percentage to be used for reserve calculations, budgeting and forecasting. We periodically review the case loss experience of an administrator or insurer, providing a historical summary of the experience of each case and in total for all cases. In addition, we provide a quarterly analysis from our CARS (CreditRe Analysis and Reserving System) that provides detailed loss demographics, data displays, and loss experience at the granular level.

We file insurance policy forms, rates, and other regulatory filings. We provide complete support for the regulatory filing process. We are a licensed third-party provider of SERFF filings, with a license to utilize EFT.

For insurance policy forms filings, we will assist in the development of policy forms. In addition, we will file those forms in all U.S. jurisdictions.

For insurance rate filings, we provide a broader range of services. We will assist in development of the rates, preparation of supporting actuarial memoranda, preparation of a basic rate support package including manual rates, and preparation of all state-specific supporting data presentations. We will file those rates in all U.S. jurisdictions and will provide complete support in handling filing objections. In particular, we have provided contractual liability insurance filing support for just about every contingency contained in credit card DPP programs.

We testify in legal disputes. Disputes between consumers and lenders/obligors/insurers, between lenders or insurers and their regulators, and among insurers/reinsurers/ administrators/marketers are a part of our day-to-day environment. We have provided expert reports and opinions, as well as testimony, in a wide variety of dispute resolution forums, including state and federal courts, U.S. Tax Court, and reinsurance arbitration and mediation. We work to ensure that your views receive a fair and balanced assessment by the appropriate decision-maker.

We teach. Our professionals have spent over 35 years teaching business people about the complex products used in this marketplace, the diverse risk transfer structures that have evolved, and the actuarial underpinnings related to pricing and reserving for these products and structures. We want you to understand the work we perform and present to you. Day in and day out we teach through our individual consulting projects, through our publications, through our presentations at industry meetings, through CreditRe seminars and conferences, and through in-house presentations.

We have fun. We truly enjoy the evaluation of the risks associated with the products that we have specialized in for 20 years and enjoy communicating our knowledge to our clients.

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Debt Protection Products - A Practical Guide for Lenders (2007,  softcover and hardcover, 287 pages, ISBN-13: 978-0-9798903-1-4; ISBN-10: 0-9798903-1-4)   This long-awaited new book explains the origin and evolution of these lending products and serves as a practical guide to aid lenders in the design, construction, and on-going management of debt protection product programs. This book is written with the lender in mind, but administrators, regulators, insurers, and others who are interested in these lending products will benefit from studying this book.   Read the Preface Read a Sample Chapter View the Table of Contents

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